In the latest action from Health and Human Services Secretary Kathleen Sebelius regarding concerns over rising insurance rates, she has sent an open letter to the CEOs of UnitedHealth Group Inc., WellPoint Inc., Aetna Inc., Health Care Service Corporation and CIGNA HealthCare Inc. asking the CEOs to publicly justify proposed health insurance premium increases.

Since the news that WellPoint, Inc.'s California subsidiary Anthem Blue Cross was planning significant rate hikes, Sebelius has asked for public justification of the Anthem hike, released a report on insurance costs, and met with insurance executives at the White House about rising costs. (See, DM 11607, 11762.)

"Last Thursday, I asked CEOs to post online the actuarial justification for premium hikes so consumers can see why their premiums are skyrocketing," Sebelius said in a press release. "Now, it's time for these insurance company CEOs to do their part to make the system more transparent for the American people. If insurance companies are going to raise rates, the least they can do is tell us why."

HHS notes that a recent Goldman Sachs report found that the insurance market has such low price competition within the industry, the companies can raise rates even if they lose customers. "Not only is price competition down from year ago ... but trend or (health care) inflation is also up and appears to be rising. The incumbent carriers seem more willing than ever to walk away from existing business resulting in some carrier changes," Steve Lewis (of the employer benefit consulting firm Willis) stated in the Goldman Sachs report.

In her letter, Sebelius says that the executives agreed in the White House meeting on the benefits of making the health care system more open and transparent. She then asks that CEOs post on their company Web sites "the justification for any individual or small group rate increases you have implemented or proposed in 2010, and continue to post such a justification in connection with any future increases. Posting this information will give Americans the opportunity to learn more and ask questions about rate increases that affect them."

Sebelius requests that the justifications contain certain information at a minimum:

--Estimates on medical cost and utilization increases, the assumptions driving these estimates, and the basis for those assumptions;

--What accounts for any differences if premiums increase more than estimated medical costs;

--The number of people who will be receiving premium increases and different levels of premium increases, by plan type, age, and sex;

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